Canadian Investment Opportunities and Electoral Regimes

Based on historical returns from 1951 to 2009 and mean-variance frontier analysis, this paper finds that investors should expect significantly better Canadian stock market opportunities in the late versus early parts of the federal government’s mandate, as well as when a Democratic versus Republican American president is in power. No significant difference in performance is observed with respect to the Canadian government’s minority status or ruling party. We explore the implications of these findings for optimal asset allocation and market efficiency.